How to Claim the Child Care Tax Credit

If your child, or disabled dependent was enrolled in a day care facility or somewhere similar so that you could work, you're most likely eligible to claim some of the associated expenses as credit towards this year's tax bill.

This page:

• Describes how the child care tax credit works

• Lists the basic requirements for qualification

• Explains how to claim this credit electronically or with a paper return

Make Claiming All Your Tax Credits Easier:

If you want to avoid costly mistakes, while at the same time taking advantage of all credits and deductions, you'll want to do your taxes with H&R Block this year.

H&R Block helps you work quickly and easily, and it double-checks your return to help you get the largest possible refund. You can even file your state taxes and get your state refund (which may be substantial) much faster than if you mail a paper return.

How The Child Care Tax Credit Works

The child care tax credit is intended to help individuals whose employment makes child care essential. If you have a child(ren), you know the cost of care can be a huge chunk of your family's budget.

This credit is designed to recover some of those expenses at tax time.

Likewise, the credit for dependent care allows for people with disabled dependents to recoup a portion of the costs.

The allowable amount for this credit is limited to a maximum of $3,000 for one child (or dependent) and $6,000 for more than one.

Are You Eligible to Claim This Credit?

To be eligible, you must meet some preliminary requirements. For the child care credit:

• You (and your spouse, if you are married) must work.
• The child cannot be older than 13.
• The child care provider can not be a member of your household.

For the dependent care credit:

• You (and your spouse, it you are married) must work.
• The dependent can not be capable of self-care.

There are additional limitations in claiming the federal child tax care credit:If the total yearly cost for child care or your total earned income were less than the maximum allowance, the amount you may claim is reduced. When totaling your yearly expenses for child care, only include wages to the care provider and any payroll taxes you paid. The IRS does not consider other costs to be expenses.

Once you determine the smallest of these three figures - your earned income, your child care expenses, or the maximum credit allowance - only a percentage of that amount is actually claimed as your child care tax credit. Depending on your income, you can claim anywhere from 20%-35% of your child or disabled dependent care costs as a tax credit.

SidebarDoing your taxes online makes all the calculations and rule-checking much easier. You can e-file online with H&R Block, where you can choose to have a tax professional help you with your return. Plus, you will be able to work on your return for free, until you actually decide to file.

How to Claim This Credit

To claim the credit, your tax return must include the name of the care provider, the provider's address and identification number (which can either be a social security or EIN number) and the total amount paid for care during the tax year. If you are unsure of any of the information, request that your child care provider complete Form W-10. Once complete, this form will list all the crucial information.

To claim the credit, the name and social security number for each child or disabled dependent is also required.

Note: if you file a paper return, you may not use form 1040EZ to claim this credit. You must instead use the more detailed form 1040 or form 1040a to prepare and file your return. You will also need to fill out IRS Form 2441 and include it with your return.

Related IRS Publications

You can get more information about the credit for disabled dependent and child care directly from the IRS, in the form of IRS Publication 503

If you file a paper tax return, you need to attach IRS Form 2441 with your 1040, or if you file a 1040A, you need to attach Schedule 2